In a recent interview, Peter Schiff said he doesn't see any new triggers to worsen the sell-off of gold. Currently, there are a lot of speculators driving the market and Schiff believe the markets are wrong about the economy being on the verge of a recovery.

Gold entered bear market territory in April after falling 20% from its cycle high. Today, it broke below the $1,200 level.

Euro Pacific Capital's Peter Schiff told Business Insider that he doesn't see any new triggers to worsen the sell-off.

Rather, he thinks we should consider what drove the sell-off in April. Here's Schiff:

"You have a lot of speculators driving the market. You have speculative longs that are getting out and you have speculative shorts getting in and in some cases they're the same people that are flipping their position, they were long and now they're short...

"I think the idea came that the stock market is doing well. It has been outperforming gold. People were looking at what they perceived to be better opportunities elsewhere. There was the perception that as far as the global financial crisis the worst was behind us, and then you got Ben Bernanke basically claiming victory saying his policies have worked and we finally have the recovery we have been waiting for, and that he's on the verge of removing quantitative easing. ...The Fed taking this away is giving people more reason to sell gold."

Schiff thinks the view behind this gold trade is wrong.

Gold is currently selling below the cost of production. And the cost of production has increased because of rising inflation. He anticipates mining companies won't invest in capital expenditures or exploration until gold hits $2,500 to $3,000 by his estimates. The resulting shortage in supply should push gold prices higher.

"Mining is very energy intensive and ten years ago, oil was $12 - $15 a barrel, now it's $95 a barrel. So that's just one of the costs. Labor costs have gone up because the cost of living has gone up in many of the countries where gold is mined. The price of gold isn't even high because it doesn't even reflect its production costs...

"It shows you how prices need to go higher. Most mines are going to be shut down and there will be no supply and that all by itself means the price of gold has to go up because there will be no supply."

Schiff also thinks the market is wrong about the economy being on the verge of a recovery.

Not only does he not expect the Fed to taper its $85 billion monthly bond purchase program, he expects the Fed to increase QE. He also doesn't think the U.S. economy is on the verge of a recovery. "It is on the verge of a recession," he said. "The whole narrative is wrong."

While he thinks it is possible for gold to fall to $1,000, he thinks there has been a mispricing in gold and that it will turn around.

"I don't know if it's going to take more weak economic data, if it's going to take Ben Bernanke himself or if the market is just going to exhaust the sellers on its own. I mean we're so oversold at this point so I don't know what is ultimately going to turn the psychology and turn the momentum. I just know that it's going to turn. And when it does, it's going to be vicious...

"There's a lot of gold buying coming. I think this decline has brought the pessimism and the fear back into the gold market. There were too many professional investors who were on board, in fact a year, a year and half ago, it was 90% bullish on gold, now it's like 1% bullish. It's never been this low. The sentiment has completely turned at a time when fundamentals have never been better for gold. They've never aligned better than right now and everybody is basically talking about its demise. …I think it's on the verge of its biggest rally ever, but I can't tell you when it's going to start."

If you're looking for him to put his money where his mouth is. Here's proof.

Schiff said he is increasing his position and that he is launching a a gold stock mutual fund in a few weeks, and he is convinced that there is tremendous opportunity there.